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Other Financial Information
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Corporate
Corporate operations comprises net central operating costs, together with those equity accounted investments which do not form part of one of the group’s operating divisions. The 2005 profit includes £3.9m operating profit from equity investments disposed of in 2005 including five, SIS and SDN.
Dividend
An interim dividend of 4.4p (2005: 4.0p) per share will be paid - an increase of 10 per cent. The interim dividend on the ordinary shares will be paid on 20 October to shareholders on the register on 1 September.
Cash and cash conversion
Our balance sheet remains strong with net cash at the end of June of £181.5m. Continuing operating cash conversion was 82.1%. After the end of half year we acquired Commonwealth for £83m.
Pensions
At 30 June 2006 the aggregate deficit under IAS 19 had decreased to £25.3m from £52.3m at 31 December 2005. This reflects additional contributions of £6.1m made by the group, together with an increase in bond yields. On a funding basis the schemes show an aggregate surplus of £11m (2005: deficit £10m). The IAS 19 interest charge was £nil (2005: £1.3m).
Tax
The effective tax rate in the first half of 2006 was 20%.
As disclosed in our 2005 results, UBM is in dispute with HMRC with regards to a technical matter arising in relation to the sale of our Regional Newspapers business in 1998. The tax in dispute is estimated at £80m. The hearing with the Special Commissioners took place on 21 July 2006. We do not expect the matter to be resolved until 2007 at the earliest.
Interest and financing
Net interest income for the six months was £5.4m (£6.5m). Net interest income included £8.5m of interest on surplus cash balances, reduced by £3.1m interest payments on the group’s notes and facilities.
In H1 2005 the income of £23.5m reflected a credit of £13.3m for the movement in fair value of the option element of the convertible bond and a one off exchange gain of £10.2m. Net financing costs other than interest in H1 2006 of £(20.5)m includes the accounting charge for the movement in fair value of the option element of the convertible bond prior to buyback or conversion.
Other financing costs relating to the pension schemes of £nil (2005: £1.3m) represent the financing charges on the pensions deficit calculated in accordance with IAS 19.
Return of capital
We indicated in February that we intended to return more than £300m of capital to shareholders by the end of 2007. We remain committed to that goal and are working towards a more leveraged balance sheet in the medium term. Since February we have returned £142.2m through convertible and ordinary share buybacks. In the first six months of the year we have spent £68.1m on buying back our convertible bond. The balance was converted into 10.2m ordinary shares. There are no convertible bonds outstanding. We also purchased for cancellation 11.1m ordinary shares at an average price of 666 pence per share i.e. a return of £74.1m this year.
Non-recurring items - Disposals
In the first half we realised £16.7m from the disposal of a number of smaller titles including Printing World and Packaging Magazine, Industrial Equipment Mart, The Trader, Trade-It, The Knowledge and Benn’s Media from the CMPInformation portfolio. Revenue (£5.1m) (2005: £7.5m) and operating profits (£0.8m) (2005: £1.5m) from these titles are accounted for as “Discontinued”. Proceeds from property disposals were £15.8m. The profit on disposals was £13.3m. |
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